LAKE CHAPALA SOCIETY
BOARD MEETING
October 1, 2008

The meeting was called to order at 11:30 am by President Nancy Creevan.

Board members present were: Nancy Creevan, Richard Bailey, Mary Alice
Sargent, Rick Feldmann, Diane Miller and Mary Ann Waite.

Others present: Scott Casbeer, Sandy Cross, and Ken Caldwell.

Diane Miller introduced Sandy Cross as the new Activities Director who gave a
summary of her background. Diane is training her on the activities software.
Sandy then left the meeting.

A motion was made to approve last month’s minutes by Mary Alice Sargent and
seconded by Rich Bailey. Motion approved.

Nancy Creevan nominated Ken Caldwell to fill the vacant position of Director #1.
Mary Alice Sargent made a motion to accept the nomination and to approve Ken
Caldwell as Director # 1. The motion was seconded by Mary Ann Waite. Motion
approved.

Scott Casbeer handed out the Financial Report. The total income for the month
of September was $187,581.50 pesos. Expenses for the month were
$272,113.14 pesos. Net income for September was minus $84,531.64 pesos.
YTD net income for 2008 is minus $450,645.46 pesos.

Some notes on income for the year are as follows:

• Membership Fees are down 10%
• Video Rentals are down 27.6%
• Donations are down 3%
• Special Donations to Student Aid are down 30%

• Building & Grounds Maintenance is up 39.3%
• Wages are up 31.9%
• Contractual Services are up 8.4%
• Miscellaneous Expenses are up 111.4%

1. The original budget, inherited from the 2007 Board, was found to have
been based only on prior year income and expenses with little
consideration for anticipated changes. It was a September 1 through
August 31 budget because prior administrations wanted to see the cash
flow increases from membership dues in the beginning months of the
fiscal year.
2. The Board changed the fiscal year to end December 31 so no future
Board would inherit budgets created by prior administrations. The Board
also had the Senior Finance Director develop a quick, revised budget to
consider anticipated changes in income and expenses.
3. This initial revised budget reflected losses for the year, so the Board then
eliminated all discretionary spending and created fees for non-members
and others who use the LCS grounds or attend LCS functions.
4. The Board then found that LCS had collected IVA taxes on the sales of
directory ads and this was being shown as income without recognizing the
liability that LCS was not permitted to collect IVA and that these taxes now
had to be paid to Hacienda. This increased the projected losses for 2008.
5. Problems were also found with past due accounts receivables for directory
ads. There appeared to be significant ad sales in 2008 and some in 2007
that had never been collected. This caused the Board to create an
accounts receivable list for collections and to change the policies and
procedures over future directory ad sales. The major changes, listed
below, led the Board to believe there could be less revenue from directory
ad sales this year and the losses were projected to bigger in 2008.
   • No ads would be printed unless LCS had full payment for the ads
by November 30th of each year.
   • No ads would be sold to businesses who refuses to pay amounts
due from prior years.
   • No IVA would be collected on any 2009 directory ad sales.
6. The Board took further action to increase revenues by dropping the
percentage paid the sales people from 25% to 20% on the revenues they
bring in. It also insisted they add additional new sales staff in Guadalajara
to tap into those potential sales. The results from these changes wouldn’t
be observed however until the end of October or early November.
7. In September the Senior Director of Finance reported to the Board that he
had performed a cursory analysis of the budget and finances that included
additional problems:
   • Cash in Bank was being overstated by over $100,000 pesos
because a charitable donation that had been given LCS was being
shown as income when the money was passing through LCS only
for outside non-LCS programs.
   • Cash in Bank had also dropped significantly from $1,119,681 to
$331,587 pesos in under two years.
   • Wages and benefits were found to be understated and a
comparison between 2007 and the 2008 showed that they
increased over $239,000.

1. The Treasurer’s position will be eliminated and the work transferred to the
current outside accountant at an annual contract cost that would increase
from the current $24,000 annual to up to $80,000 annual.
2. The Librarian’s position will be eliminated and the work transferred to a
volunteer Director.
3. The Office Manager at LCS will be released and LCS will seek a
replacement who is bilingual, who can work additional hours, who is
skilled in computers, and who may be made responsible to work with
membership and directory ad sales. The salary for a new Office Manager
should not exceed $1,800 per week.

Diane Miller seconded the motion and it passed unanimously.

Rick Feldmann then made a motion to raise the 2009 membership fees effective
November 1, 2008, as follows:



Rich Bailey seconded the motion and it passed unanimously.

Ken Caldwell then made a motion that an announcement be prepared by the
Public Relations Director and be distributed to the remaining employees (in
Spanish) immediately after all affected employees are let go on Friday, October
3rd, and that copies of the announcement be distributed unchanged as follows:

1. A copy to be sent to Jeanne Chaussee of the Guadalajara Reporter on
Friday,
2. a copy to be sent to the Lake Chapala Review on Friday,
3. copies to be posted prominently on the LCS and Wilkes grounds no earlier
than Friday afternoon,
4. a copy to be posted prominently on the LCS web site on Friday afternoon,
and
5. that it be included in the newsletter for distribution no earlier than Friday
afternoon.